Policy choices and outcomes for offshore wind auctions globally

TL;DR

This paper provides a comprehensive global analysis of offshore wind auction schemes, revealing their diversity, evolution, and the relationship between policy design and cost competitiveness.

Contribution

It offers the first detailed, quantified overview of offshore wind auction designs worldwide, including their geographical spread, outcomes, and contextual factors.

Findings

Auctions are diverse but show regional similarities.

All auctioned projects employ some revenue stabilisation mechanism.

Cost declines correlate with increased adoption of auction regimes.

Abstract

Offshore wind energy is rapidly expanding, facilitated largely through auctions run by governments. We provide a detailed quantified overview of applied auction schemes, including geographical spread, volumes, results, and design specifications. Our comprehensive global dataset reveals heterogeneous designs. Although most remuneration designs provide some form of revenue stabilisation, their specific instrument choices vary and include feed-in tariffs, one-sided and two-sided contracts for difference, mandated power purchase agreements, and mandated renewable energy certificates. We review the schemes used in all eight major offshore wind jurisdictions across Europe, Asia, and North America and evaluate bids in their jurisdictional context. We analyse cost competitiveness, likelihood of timely construction, occurrence of strategic bidding, and identify jurisdictional aspects that might have influenced auction results. We find that auctions are embedded within their respective regulatory and market design context, and are remarkably diverse, though with regional similarities. Auctions in each jurisdiction have evolved and tend to become more exposed to market price risks over time. Less mature markets are more prone to make use of lower-risk designs. Still, some form of revenue stabilisation is employed for all auctioned offshore wind energy farms analysed here, regardless of the specific policy choices. Our data confirm a coincidence of declining costs and growing diffusion of auction regimes.